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Book Keeping &Book Keeping &

Maintenance ofMaintenance of

AccountsAccounts

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On daily basis

Subsidiary books like personal ledgers and billregisters

Day Book

Department Specific Books Receiving Cashiers cash book

Paying Cashiers cash book

Main Cash book

Cash Balance book

Others

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Payment SystemPayment System

Quick Payment System

Onward Clearing

Inward Clearing

Image Based Clearing

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ALMALM

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ALM is a system of matching cash inflows

and outflows, and thus of liquidity

management. Hence, if a bank meets its

cash reserve ratio and statutory liquidity

ratio stipulations regularly without undueand frequent resort to purchased funds, it

can be said to have a satisfactory system of

managing liquidity risks, and, hence, ofALM.

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The actual concept of ALM is however

much wider, and of greater importance tobanks' performance. Historically, ALM has

evolved from the early practice of

managing liquidity on the bank's asset

side, to a later shift to the liability side,termed liability management, to a still later

realization of using both the assets as well

as liabilities sides of the balance sheet toachieve optimum resources management.

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ALM is a risk management tool that helps a

bank's management take investment /disinvestment decisions, maintain the requiredstatutory liquidity ratio (SLR), credit reserve ratio(CRR) and other ratios as per Reserve Bank of

India (RBI) guidelines. It generates the Structural liquidity profile (SLP)Interest rate sensitivity (IRS) Maturity andposition (MAP) Statement of interest ratesensitivity (SIR) reports and supports riskmanagement modules like graphical analysis,data analysis and interest rate simulation.

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RBI Model of ALMRBI Model of ALM

Based on GAP Analysis, subsequently VaR andDuration analysis. Global regulations governingthe credit risk given in the Basel Accord aretaken into consideration.

Segregate the assets and liabilities into variousmaturity buckets and identify those which areinterest sensitive

RBI has given a benchmark for liquidityrequirement in certain cases. If adequateinformation is available regarding maturitypattern of assets and liabilities, liquidity limit fordifferent buckets could be set.

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On the basis of past experience they can

assess the liquidity requirements of different

savings and current accounts.

They can project movement of interest rate

and exchange rate in future.

For Ex: in the case of export refinance RBIhas stipulated that maturity profile of the

availed portion of export refinance has to be

based on the underlying assets

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Broadly, there are 3 requirements to

implement ALM in these banks, in the

stated order: (a) developing a better

understanding of ALM concepts, (b)

introducing an ALM information system,

and, (c) setting up ALM decision-makingprocesses (ALM Committee/ALCO).

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Banking ServicesBanking Services

Permitted Business

Prohibited business

Direct or indirect trading activities and undertakingtrading risk unless held by it

Possessing immovable property for more than 7+5

years.

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Nature ofBanking OperationsNature ofBanking Operations

Mobilize Deposits Demand deposit

Time deposit

Utilize the deposit for lending Overdraft, Demand loans, Cash Credit

Discounting Bills of Exchange

Secured advance & Unsecured or CleanAdvance